7 Strategies And Tips To Reduce Debt

ByJamie Colclasure
Credit Cards Wikimedia Commons

There are many people who want to grow their savings and eliminate their debt. However, sometimes having a lower income can hinder those dreams. It may be hard, but it is not impossible. Here are ten strategies and tips to help you overcome debt.

  1. Knowing where your money is going is one of the first things you can do to get rid of debt and be financially healthy. Use a budgeting app to help you determine where each dollar goes and what can possibly be cut out that can be used toward reducing bills. An example is cutting $100 a month from spending. After twelve months, this would be $1,200 extra that can go toward debt.
  2. Track your debt and the progress you are making on paying it off. Ensure that each month, your bills are all being paid on time. Perhaps even set up automatic payments so you are never late. Seeing the progress you make can also encourage you to keep going.
  3. It’s also important to have a strategy for paying off debt. There are two big ones you can look at. The debt snowball effect is taking the smallest debt you have and paying it off. Then move on to the next smallest one. Seeing progress will help and push you to continue on the path to being debt-free. The avalanche effect is when you start by paying off the highest-interest debt first while making minimum payments on all the others. Then, you start paying down the next highest-interest debt. In the end, you will pay less interest over time by knocking out the higher interest rate debts first.
  4. Another possible option is to apply for a new credit card with a low interest or no interest balance transfer rate. This will allow more of your payment to go to the principal instead of just interest.
  5. If you have decent credit, a debt consolidation loan may be the way to go. This would combine your bills and have only one interest rate versus several. Plus, many consolidation loans have set loan terms just like car payments.
  6. If you own your home, there is always the possibility of using the equity you have in your real estate to get cash to pay off bills. Some lenders will make you refinance the entire loan and give you a certain percentage of equity that you have available.
  7. If all else fails, there is always the possibility of doing a few side hustles to get some extra cash to put toward bills. Getting a second part-time job is also an option.
Jamie Colclasure
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